What the Half?

Halving is an event which happens within the Bitcoin (BTC) and Litecoin (LTC) proof of work protocols where the reward that miners receive for discovering a new block gets cut in half. In Bitcoin’s case, halvings occur every 210,000 blocks.

Bitcoin has already gone through two previous halvings in November 2012 and July 2016 when the rewards were cut from 50 BTC to 25BTC, and 25 BTC to 12.5 BTC respectively. Considering a Bitcoin block is mined every 10 minutes, the next halving should happen in late May 2020 when the reward will be further reduced to 6.25 BTC.

Back to the Future

Looking at the historical Bitcoin price movement, there are clear upticks which began approximately one year before both previous halvings.

Pantera Capital has recently illustrated this block reward versus price trend suggesting that the time for accumulation is now.

We have seen a couple of these cycles where the tide begins to shift roughly a year before block reward halving dates. Inflection points occurred 376 and 320 days prior to the 2012 and 2016 “halvings”, respectively. Next halving is expected May 24, 2020https://t.co/rLUh849Qt9 pic.twitter.com/IXre5X85fS

— Pantera Capital (@PanteraCapital) March 28, 2019

It notes that inflection points occurred 376 and 320 days before the previous halvings respectively. This suggests that BTC reaches its lowest points approximately one year before a halving.

It should be noted that a golden rule in any financial market that previous price action is not a reliable factor in predicting future movement. However, the price action after the first and second halvings bear many uncanny similarities.

After the first halving, BTC saw a sharp move to the upside, surging from $10 to more than $1100 in just over a year. This was followed by an elongated bear market which lasted two years and saw the price sink dramatically back to the $200 dollar range, a loss of around 83 percent.

The second halving brought with it another hyperbolic swing, as the price shot from $550 to the new all-time high of nearly $20,000 at the end of 2017. This was of course followed by an 85 percent correction during the ‘crypto winter‘ of 2018.

BTC prices have been stabilizing thus far in 2019, trading in the range of $3,500 and $4,100. For those who believe in the long-term growth potential of Bitcoin, there may never be a more profitable time to accumulate BTC at these prices.

Do you think Bitcoin will follow a similar pattern of growth moving into the third halving? Did 2018’s bear market completely alter the course of BTC’s price for the worse? Let us know your thoughts in the comments below! 

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